Synopsis: Tata Communications Ltd rose after CLSA reiterated a Buy rating with a ₹2,600 target, implying ~31% upside. The brokerage cites strong growth in digital services (cloud, cybersecurity, IoT), improving margins, and global enterprise demand. The company is seen as a key beneficiary of AI and cloud-driven digital infrastructure spending.
The shares of the TATA Group company, which specialises in global digital infrastructure and telecommunications, are in focus as the Global Brokerage firm CLSA has maintained a Buy rating, with an upside potential of 31 percent.
With a market capitalization of Rs. 57,384.75 crores in the day’s trade, the shares of Tata Communications Ltd rose upto 1.8 percent, making a high of Rs. 2,028.75 per share compared to its previous closing price of Rs. 1,991.10 per share.
What Happened
Tata Communications Ltd, engaged in global digital infrastructure and telecommunications, is in focus after the Global Brokerage firm CLSA has maintained an Outperform Buy rating of target Rs. 2,600, with an upside potential of 31 percent from the previous close price.
Reason for the Target
Leadership in Enterprise Digital Services
Tata Communications has established itself as a leading provider of enterprise connectivity, cloud, cybersecurity, and digital transformation solutions. Its extensive global network and strong relationships with multinational corporations position it well to benefit from increasing enterprise spending on digital infrastructure, creating sustainable long-term growth opportunities.
Strong Growth in Digital Portfolio
The company’s digital services portfolio is growing at around 20% year-on-year, significantly faster than traditional connectivity businesses. Higher demand for cloud networking, cybersecurity, IoT, and managed services is driving this growth. These segments also carry better margins, improving the company’s overall profitability profile.
Shift Towards High-Margin Revenue Streams
Tata Communications is gradually increasing the contribution of digital and platform-based services within its revenue mix. As these businesses scale, operating leverage improves, and margins expand. This transition reduces dependence on lower-growth legacy services and supports stronger earnings growth over the coming years.
Beneficiary of Global Digital Transformation Trends
Enterprises worldwide continue to invest in cloud adoption, AI infrastructure, secure networking, and data management. Tata Communications is well-positioned to capitalise on these structural trends through its integrated service offerings. The company’s global presence allows it to serve clients across multiple geographies and industries.
Attractive Valuation Relative to Growth Potential
CLSA believes the stock’s current valuation does not fully reflect its growth prospects in digital services and margin expansion potential. As earnings visibility improves and the digital business becomes a larger contributor, the market could assign a higher valuation multiple, supporting the Rs. 2,600 target price.
Could Tata Com Be the Biggest Beneficiary of the AI & Cloud Boom?
Tata Communications is increasingly positioned at the centre of enterprise digital infrastructure, which directly aligns with the global AI and cloud expansion. The company’s leadership in enterprise connectivity, cloud networking, cybersecurity, and managed digital services makes it a natural beneficiary of rising corporate spending on AI-ready infrastructure.
With its extensive global network and strong multinational client base, it is well placed to support large-scale data movement, secure cloud adoption, and hybrid IT environments, all core requirements of the AI and cloud boom. The company is also undergoing a clear structural shift toward higher-margin digital services, which are growing at around 20% year-on-year, far outpacing legacy connectivity businesses.
As cloud, IoT, and cybersecurity solutions increase their revenue share, operating leverage improves and profitability strengthens. This transition, combined with strong global demand for digital transformation, positions Tata Communications as a key long-term beneficiary of AI and cloud adoption. Investors believe this improving growth visibility is not fully reflected in current valuations, supporting expectations of re-rating potential.
Financials & Others
The company’s revenue rose by 9.41 percent from Rs. 5,990 crores in March 2025 to Rs. 6,554 crores in March 2026. Meanwhile, Net profit declined from Rs. 1,041 crores to Rs. 259 crores in the same period.
The company shows decent efficiency with a ROCE of 14.7% and a strong ROE of 34.0%, indicating good returns generated from both capital employed and shareholder equity. Its 3-year average ROE of 48.1% highlights a consistently strong profitability track record. It also maintains a healthy dividend payout of 45.9%, meaning it returns a good portion of profits to shareholders while retaining enough for growth.
Tata Communications Ltd is a global digital infrastructure and technology company headquartered in India. It is part of the Tata Group and provides services such as global network connectivity, cloud solutions, cybersecurity, IoT, and managed services. The company operates one of the world’s largest subsea cable networks, enabling international data and voice communication for enterprises, telecom operators, and digital platforms.
It focuses heavily on enabling digital transformation for businesses by offering secure, scalable, and high-performance communication solutions. Its services support industries like banking, media, manufacturing, and technology by helping them connect operations globally and manage data efficiently. The company plays a key role in powering internet backbone infrastructure and enterprise digital ecosystems worldwide.
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